Your HR and Payroll compliance and policy solution! Comply with federal, state, and international laws, find answers to your most challenging questions, get timely updates with email alerts, and more with our suite of products.

NEWS

Were Truck Drivers Employees Despite Terms of Agreement?

Stay alert to regulatory changes affecting compensation and benefits, find out about industry trends, and review current surveys and statistics with Benefits & Compensation Management Update.

“I've told you before you can't wear those pants on delivery runs,” Steven, who sent a package-delivery service's truck drivers their routes, told Marie, one of the drivers, who replied, “If you are going to try to control my working conditions, such as by telling me what to wear, then you need to pay me like an employee, not like the independent contractor you claim that I am.”

FACTS:A truck driver worked in Kansas for a package-delivery service and nearly 500 other truck drivers who also had full-time delivery routes in the state for the company brought a class action against their employer, claiming their employer improperly classified them as independent contractors. They sought repayment of expenses they incurred as drivers and unpaid overtime.

The employer controlled how many deliveries they could make and required that they purchase vehicles, tools, certain equipment and clothing, the truck drivers said.

The drivers had profit-and-loss opportunities that supported an independent-contractor finding, the company claimed.

An appeals court asked from the state supreme court guidance on two questions: whether, under state law and according to the case's undisputed facts, the drivers are employees or independent contractors and whether such status might be different for drivers with responsibility for more than one service area.

ISSUE: Were the drivers independent contractors or employees?

DECISION: The drivers were employees under the Kansas Wage Payment Act, not independent contractors excluded from the state law's protection, the Kansas Supreme Court said.

The state supreme court had not established a test to distinguish employees from independent contractors under the KWPA, but said it would apply a 20-factor test that it used in state workers' compensation cases and that “includes economic reality considerations, while maintaining the primary focus on the employer's right to control.”

The company's agreements with drivers were structured to depict the drivers as independent contractors, but a “compelling factor” was how the agreements were implemented, the court said.

The company supervised drivers in extensive detail and typically maintained long-term relationships more consistent with an employment relationship than with an independent business relationship, the court said. The company's “control and micromanaging” were inconsistent with its claim that the drivers were independent contractors, it said.

The court expressed skepticism of the company claim that the drivers had profit-and-loss opportunities. “To truly have the ability to make a profit, a business owner must have control over the amount of revenues generated and control over the amount of expenses incurred.”

Company specifications about the drivers' vehicles, clothes and other items made it impracticable for drivers to reduce expenses, while the drivers' revenue depended on the company making more packages available for delivery, the court said.

The company “established an employment relationship with its delivery drivers but dressed that relationship in independent-contractor clothing,” the state supreme court said, ruling in answer to the federal appeals court's first question that undisputed facts show the drivers to be employees as a matter of law.

The company's employment relationship with a full-time driver would not be altered if the driver acquired an additional service area for which he or she was not the driver, the state supreme court said, ruling in response to the federal appeals court's second certified question. A full-time driver would not lose protection under the state wage payment law by acquiring one or more additional delivery routes and hiring someone else to deliver there, it said (Craig v. FedEx Ground Package Sys. Inc.,2014 BL 276508, Kan., No. 108,526, 10/3/14).

POINTERS: Employers must have accurate and reliable ways of classifying employees because such decisions usually determine how employees are paid and their benefits.

State wage and hour laws and special provisions within the Fair Labor Standards Act exempt certain groups of employees from coverage.

Depending on the particular provisions, employees may be exempt from all FLSA coverage or exempt only from the law's minimum wage or overtime requirements. Distinctions made by compensation specialists between exempt and nonexempt employees are based on FLSA exemptions available for white-collar employees, such as executives, administrators, professionals and computer technicians, and for full-time students, disabled employees, apprentices and other employee classes.

The U.S. Supreme Court has ruled that the exemptions available under the FLSA are to be applied only to the employees and establishments that “plainly and unmistakably” meet the letter and the spirit of the law. As a consequence, employers must be careful that employees meet the requirements of the applicable exemption test before departing from the FLSA's rules.

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.

Put me on standing order

Notify me when new releases are available (no standing order will be created)